VSA and Retail Forex Trading

[Ingot54 13]

First of all a big thank-you to those who have gone before, in these VSA threads.

 

Your legacy is the enlightenment and education of traders who now no longer need to be fodder for those market participants we call "professionals". As a raw beginner (in VSA studies) I am already persuaded, and it remains for me to continue to apprise myself of all available knowledge, and bring myself to competitive and professional competence in the practice of VSA in trading.

 

My chosen instrument is the Foreign Exchange market, traded through Retail Brokers littering the industry, relieving the unwary of their trading accounts before they even knew what happened. Just when I began to master the techniques developed for succeeding in making regular and profitable headway, along comes VSA into my life, and my approach has been turned on its head in one day.

 

I am heavily into studying the sticky threads in this genre, and am almost saturated with information overload. But I can't put it down.

 

A few things are emerging:

 

1) Reliable and accurate volume data is NOT readily available to clients of MT4 brokers

2) MT4 platforms do NOT provide useful (inbuilt) indicators that specifically deal with VSA analysis

3) The limited resources available to Retail Forex Traders come at a price - comparative value of which has not been established.

 

In simple language, few brokers provide the tools and data to retail forex traders. And of those that do, it not clear whether there is true value in their offerings or not.

 

This seems to be an area that remains undeveloped, when compared, for example, to the equities and other markets (S&P500, and futures, eMinis etc).

 

There seems to be a couple of reasons for this:

 

1) Retail Spot Forex is a derived market, and each broker usually only has, or reveals, the volume that is traded through their dealership.

2) Popular platforms (specifically MT4) are unequipped to handle "plug-in" applications such as volume data from reliable feed sources, and even less equipped with the software required to turn this data into meaningful and tradeable signals

3) There is so far no competition, or at best, negligible competition within the Retail Forex industry that would be needed to drive change and increasing quality of VSA information

 

While the general markets (for which accurate volume data is available) are well catered for, little is known about volume - true volume - within the Foreign Exchange markets - either Interbank or Retail brokers who only reflect price.

 

Indeed, far more emphasis is being placed on reducing spread and commissions, than is being placed on bringing all the market data into the ring for all to see, use and benefit from.

 

Can anyone provide information that will relieve me from my concerns in these areas:

 

1) Data suppliers that offer reasonably accurate Volume data (eSignal and IBFx have been mentioned)

2) Trading Platforms that are more or less dedicated to at least catering for Retail Forex trading as one of the instruments they offer

3) Software that can utilise retail Forex Data from a dependable volume sorce, once discovered.

 

I understand the difficulties data suppliers face in this area - Interbank participants are not required to report volume data for three months - by which time it is far too old to be worth considering in current trading decisions, by any but the longest term traders. But there has to be some growth happening in this area.

 

I suggest that the first broker to secure reasonable volume data would stand head-and-shoulders taller than the industry norm, where Forex trading is concerned at spot level.

 

I would be keen to learn from any traders who are successfully able to apply VSA to the Retail Forex market. If this is not available to the retail trader, then can it be assumed that it is also unavailable to the 'professionals'?

 

If indeed we are on a level playing field, where volume data is concerned, should we not learn how the 'professionals' are coping also? After all, if they are supplying the volume to the market that we buy and sell (as our counter-parties), how are they doing it?

[BlowFish 10]

No one supplies real volume information not just the MT4 brokers. That is because it is just not available. What gets reported as volume is based on bid/ask changes not actual trades.

 

It all comes down to whether you think changes in quoted prices is a good enough substitute for volume? Why add anther potential hurdle to your success?

[Ingot54 13]

No one supplies real volume information not just the MT4 brokers. That is because it is just not available. What gets reported as volume is based on bid/ask changes not actual trades.

 

It all comes down to whether you think changes in quoted prices is a good enough substitute for volume?

 

Thanks Blowfish.

 

This does seem to place traders of spot Forex at a disadvantage (when compared to equities and futures traders and others) if we are to apply the concept of volume across the whole trading spectrum.

 

Whether that disadvantage is small and insignificant, or large enough to derange the concepts applied in VSA, will depend on how accurate the trader needs the analysis to be. Given that the Foreign Exchange market has arguably the largest liquidity of all the traded instruments, it is odd that we do accept without question or argument, that statement without measurable proof - the proof that goes with accurate volume data to back up the claims of liquidity. We take that liquidity for granted, yet have no idea of its verity.

 

An examination of the operation of the MT4 (and other bucket-shop) brokers (eg or IG Index) does therefore seem to support the notion that if they are not personally taking the opposite side of the positions placed by traders, then they are passing those trades directly into the markets from which they derive their spreads.

 

Thus, tracking the fate of trades "should" lead to a larger and more liquid entity on the derivative side of the Forex market, since the Spot Forex market is only a mirror of the true Interbank quote. One wonders whether large dealers like Dukascopy could report volume, and whether other similarly large dealers could be asked to provide volume collectively, to create an industry standard.

 

Such a feat should be able to be accomplished, in this computer age.

 

Given that traders may trade with Retail brokers, or through their banks as perhaps Institutions do (or more directly as perhaps countries do through the Interbank if you have big enough accounts) it is intriguing that the Retail Forex Industry has been able to proceed as it does for so long, operating on artificial volume. I suspect a degree of accountability is missing somewhere in all of this, if the retail side of the market is so poorly monitored.

 

But small fish are not going to make any inroads into the operations of sharks!

 

Why add another potential hurdle to your success?

 

What I hear you saying is that traders should get on and trade VSA in Retail Forex as if the platform volume offered by the brokers is the real thing. And that not accepting this data places traders at risk of missing out on the wider benefits of using VSA - eg in taking the concepts of price action to higher levels.

 

Rather than throwing the baby out with the bathwater, I think it is OK - even preferable - to do as you suggest and just get over it and get on with it.

 

Indeed there are folks who are managing to do just this with Forex, and with great success:

 

vsa with Malcolm @ Forex Factory

 

Finally, I made an inquiry to NinjaTrader about how they derive volume for their platforms. They responded with this, in about 4 hours (not bad for a Sunday night query/response turnaround):

 

Thank you for your note and interest in NinjaTrader!

 

NinjaTrader uses volume information as provided by the supported broker/data provider that you connect to it. Forex volume data will therefore vary by data provider. Please see the following link for more information on NinjaTrader supported data providers: Historical & Real-time Data

 

I suggest to contact the data prover directly for more detailed information on the Forex volume data they provide.

 

Please let me know if I can be of any further assistance and enjoy the rest of your weekend.

I was pleased with the speed (and thus the respect) with which the response came, but predictably, there is nothing new there. The onus is on the trader to select a data stream that is regarded as "good enough" and get on with trading.

 

But does a trader using an MT4 broker have any disadvantage (when using VSA ) compared to a trader who is using Dukascopy?

 

I think that would have to be affirmative, and it is exactly this anomaly that I am attempting to address. The sheer volume of business transacted by Dukascopy would possibly dwarf my local Australian MT4 broker. And this creates the anomaly.

 

And it brings me back to my original question:

 

If indeed we are on a level playing field, where volume data is concerned, should we not learn how the 'professionals' are coping also? After all, if they are supplying the volume to the market that we buy and sell (as our counter-parties), how are they doing it?

 

And it raises other questions:

 

Are the 'professionals' using volume?

Are they collectively responsible for this volume?

Or do they simply operate at certain levels, with an opinion of where they think the market is going?

If 'they' have no better access to volume figures, then they must be operating on price. What is their alternative?

Does this tilting of the playing field disadvantage the retail trader?

 

My discovery and reading about VSA over only the past 36 hours, has raised more questions than I have been able to find answers for.

 

Am I being too anal about this? Does the lack of true volume, or even consistency between data suppliers make any difference to the potential outcome of trading Forex on retail platforms?

 

Perhaps I should simplify my life and simply stick with a couple of moving average crossovers! Or move to trading the ES where such issues do not exist.

[BlowFish 10]

Actually when I said 'why add another hurdle' what I meant was if you are using an approach that requires volume then why on earth trade an instrument that does not provide that information?

 

There are those that claim to enjoy some success using VSA principles on spot. As there is no volume on spot one has to wonder whether it works for them because of VSA or in spite of VSA?

[Ingot54 13]

Actually when I said 'why add another hurdle' what I meant was if you are using an approach that requires volume then why on earth trade an instrument that does not provide that information?

 

Thanks for clarifying - I took it to mean "don't worry about true volume - just get on and trade with the tick volume supplied". Either way I have been placing far too much emphasis on trying to trade (using VSA) as a purist, when it is never going to happen. Without true volume, we have to accept the next best thing (best for whom?)

 

There are those that claim to enjoy some success using VSA principles on spot. As there is no volume on spot one has to wonder whether it works for them because of VSA or in spite of VSA?

 

The only way for me to know, will be to have a go at it. If it doesn't work, then the knowledge gained will certainly not be a burden.

 

The more I read the two .pdf files generously supplied in the sticky section, the more I see that there are some brilliant concepts that can still be applied, regardless of the presence of volume data or not.

 

While I have uncovered the data providers who may have the most accurate data (eSignal looks like being ahead of the rest) I am coming around to the view that it really doesn't matter all that much in the spot market.

 

Thanks for your input Blowfish - appreciated - and helps me to see the bigger picture.

[stephenfrankel 10]

Hi Blowfish,

I trade spot Forex using vsa which uses E signal data through the original vsa software called "Tradeguider" which was invented by Tom Williams the creator of Vsa and No one else but copied by many. The volume in Tradeguider I believe is based on tick volume which with my trading I find is very accurate as I use the volume spikes as turning points in the market to get in or out of the trade. You could learn more about Vsa from Tom Williams e book available on the Tradeguider site for about $10 I believe but I don't know of any other software that gives accurate volume. I tried MT4 and it didn't help me. Tradeguider run some free webinairs which show vsa use and volume. I am happy to send anyone that wants one of my forex charts to show you how you can see the volume bars and the spikes to prove this as I wouldn't consider trading without this!

Stephen F.

[dudleymuggins 10]

Hi Ingot, I have tried VSA on Forex and did not find it easy, so I stopped using that method (I now only trade PA on a naked chart). However, I heard some people have used the volume on currency futures as a proxy for volume on Forex. Hope this helps.

[Ingot54 13]

I trade spot Forex using vsa which uses E signal data through the original vsa software called "Tradeguider" .... The volume in Tradeguider I believe is based on tick volume which with my trading I find is very accurate as I use the volume spikes as turning points in the market to get in or out of the trade. Tradeguider run some free webinars which show vsa use and volume ... I wouldn't consider trading without this!

Stephen F.

 

Thank you Stephen. I am pleased to see someone speak up and come out in favour of Tradeguider as a platform. I do not think the arguments against it are very strong.

 

The main thing I am hearing from experienced traders is that:

 

a) It is expensive for what it is/does/achieves for the user (ca $3,000 has been stated)

b) The packaging of the indicators is excessive and complicates the simple, to somehow justify the price

c) Other platforms (eg NinjaTrader,Tradestation) can perform better/as good for free, or for a fraction of the cost.

 

I would be keen to hear your views on these points, since you are an active user of Tradeguider, and are au courant with their add-ons and product accessories.

 

Particularly I would be keen to understand the disadvantage suffered by users of the standard MT4 platform, when the VSA (custom) indicators are used, as opposed to the streamlined Tradeguider platform. Of interest would not be so much the ease of use (obviously a big plus) but the end result.

 

Can MT4 be expected to achieve the same results as Tradeguider, NinjaTrader or Tradestation, regardless of the bells and whistles?

 

Sometimes a little expense can be justified.

 

Is that so in this case?

 

Apologies for paraphrasing your quote.

[BlowFish 10]

Hi Blowfish,

I trade spot Forex using vsa which uses E signal data through the original vsa software called "Tradeguider" which was invented by Tom Williams the creator of Vsa and No one else but copied by many. The volume in Tradeguider I believe is based on tick volume which with my trading I find is very accurate as I use the volume spikes as turning points in the market to get in or out of the trade. You could learn more about Vsa from Tom Williams e book available on the Tradeguider site for about $10 I believe but I don't know of any other software that gives accurate volume. I tried MT4 and it didn't help me. Tradeguider run some free webinairs which show vsa use and volume. I am happy to send anyone that wants one of my forex charts to show you how you can see the volume bars and the spikes to prove this as I wouldn't consider trading without this!

Stephen F.

 

Hi, Thanks for the suggestion but I have had the original paper copy of Tom's book since it was first published. In those days he was happy to take telephone calls to discuss the concepts too which was a bonus! As for Tradeguider it is my view that you do not need expensive software to convert less than a dozen simple principle's into 450+ indicators!! As for 'professional salesman and marketing expert' GH personally I can't sit through all the hyperbole and misinformation on the off chance of a pearl being buried in all the ...... It is worth trying to track down Sebastians videos (there used to be a couple here).

 

Again just to reiterate tick volume on forex is constructed from quote changes not trades. If that works for you great stuff!

[Intel55 10]

Hi Ingot54,

 

I would like to commend you on your decision to learn VSA. You have raised many questions here(VSA tends to do that to you) and you should seek out the answers or doubt will forever plague your trading.

 

I'm going to say something that will sound a little pompus but, I mean the best when I say it. I could answer just about all of your questions above but I'm not going to. If I just tell you the answers, you will miss the most important aspect to the answers. All the information your require is out there somewhere but to find i, you must read and learn so much. Without this learning curve, you WILL NOT succeed in VSA.

 

Learning the VSA language takes a long time and a lot of dedication on your part. You can write off the next 12 months for sure, probably longer. But I can assure you of this, when you can 'read' the charts, you will NEVER look at the charts in the same light again.

 

There is so much info available for free on the net, forums, pdfs, videos, documents, books etc and you need to read/see it all.

 

I can offer this as a kind of incentive for you. 18 months ago I knew nothing of VSA. Now I trade VSA successfully in ONLY the forex market. Also, I do it using MT4(demo) and it's inbuilt volume feed(FXCM tho I'm just looking into changing to The collective FX due to repainting issues with FXCM during news events). I use the demo feeds mor the charting and separate platform for live trading. I do not trade full time but, this is due to personal circumstances not trading.

 

For all those people out there who say volume/ VSA doesn't work in the forex market.......they are simply wrong. In my experience, the people who say this, do not know how to read VSA.......even tho many think they do (I mean no disrespect to anyone).

[Paul Honkers 10]

try Dukascopy for real FX volume...either their platform, or MT4, via the bridge. ATC is also handy due to their ECN spreads are quite tight thus ticks up and down have more relevance than a fixed spread nickle & dime platform. The Volume indi on MT4 is completely suitable. I used to work for a bank, and I wouldn't say we were always the "smart money" but we did have size. If I needed to buy or dump 100.0 Mio US$ parcel, it would always be done in small sizes so as not to disturb the market. So while you do not have actual volume per se, you do have ticks. They are as good a guide to volume as anything else apart from the real thing.

[Paul Honkers 10]

Hi Ingot54,

you must read and learn so much. Without this learning curve, you WILL NOT succeed in VSA.

For all those people out there who say volume/ VSA doesn't work in the forex market.......they are simply wrong. In my experience, the people who say this, do not know how to read VSA.......even tho many think they do (I mean no disrespect to anyone).

 

100% agree..... get a demo account, try everything and burn through it to zero, then get another demo account and burn through it to zero, then get another demo account and you will be surprised to see you can't burn through it, it actually grows consistently....then put your cash into an account. Set the demo accounts to a real number that you want to invest so that the numbers have value & meaning to you when you win or lose. It may take a week, a month, a year, depending on your time and circumstances, but it will be time well spent. Don't use real money until your have 3 months consecutive profit on a demo account if just trading daily or weekly. If trading a smaller time frame, hourlys, then 4-6 weeks of profitable trading should be enough.

[Ingot54 13]

Hi Ingot54,

 

I would like to commend you on your decision to learn VSA. You have raised many questions here(VSA tends to do that to you) and you should seek out the answers or doubt will forever plague your trading.

 

I'm going to say something that will sound a little pompus but, I mean the best when I say it. I could answer just about all of your questions above but I'm not going to. If I just tell you the answers, you will miss the most important aspect to the answers. All the information your require is out there somewhere but to find i, you must read and learn so much. Without this learning curve, you WILL NOT succeed in VSA.

 

Learning the VSA language takes a long time and a lot of dedication on your part. You can write off the next 12 months for sure, probably longer. But I can assure you of this, when you can 'read' the charts, you will NEVER look at the charts in the same light again.

 

There is so much info available for free on the net, forums, pdfs, videos, documents, books etc and you need to read/see it all.

 

I can offer this as a kind of incentive for you. 18 months ago I knew nothing of VSA. Now I trade VSA successfully in ONLY the forex market. Also, I do it using MT4(demo) and it's inbuilt volume feed(FXCM tho I'm just looking into changing to The collective FX due to repainting issues with FXCM during news events). I use the demo feeds mor the charting and separate platform for live trading. I do not trade full time but, this is due to personal circumstances not trading.

 

For all those people out there who say volume/ VSA doesn't work in the forex market.......they are simply wrong. In my experience, the people who say this, do not know how to read VSA.......even tho many think they do (I mean no disrespect to anyone).

 

Just catching up with this again ... pushed to the back burner, but it doesn't deserve to be lost.

 

I agree with your assessment of the way to learn this, Intel.

 

When something is handed to you on a platter, it is so easy to treat it lightly, or even dismiss it. But when the SAME info is earned through your own sweat and tears, suddenly the info has value and meaning.

 

That is what I want VSA to mean to me - something valuable and usable.

 

For the moment, I will be moving slowly with this, as I am wanting to continue to develop my trading the way I am. But I imagine at some point I will be compelled to make the switch. Thank you for the encouragement.

[Ingot54 13]

100% agree..... get a demo account, try everything and burn through it to zero, then get another demo account and burn through it to zero, then get another demo account and you will be surprised to see you can't burn through it, it actually grows consistently....then put your cash into an account. Set the demo accounts to a real number that you want to invest so that the numbers have value & meaning to you when you win or lose. It may take a week, a month, a year, depending on your time and circumstances, but it will be time well spent. Don't use real money until your have 3 months consecutive profit on a demo account if just trading daily or weekly. If trading a smaller time frame, hourly's, then 4-6 weeks of profitable trading should be enough.

 

Thank you for that Paul.

 

I will get to this point eventually.

 

The way you put it sounds so easy ... Just 2 burned demo accounts and you are there!!

 

I am just kidding - I realise you were illustrating a way to quickly learn how to use VSA - and I am grateful. Next thing is a starting point. Currently I have the 2 .PDF docs that are stickies at the top of the menu ... and they are quite readable for me.

 

Other starting reading is also welcome.

 

Cheers.

[MightyMouse 12]

Retail forex does not have the volume that VSA needs.

 

The best way to get volume read on forex is to use market profile. The original use of MP was to estimate volume on futures when the exchanges charged or withheld volume information. It still works, but volume is now readily available.

 

If you became proficient in estimating volume on forex using MP, you'd probably have a leg up on other retail forex traders.

[laurus12 10]

Hi Ingot54,

 

I would like to commend you on your decision to learn VSA. You have raised many questions here(VSA tends to do that to you) and you should seek out the answers or doubt will forever plague your trading.

 

I'm going to say something that will sound a little pompus but, I mean the best when I say it. I could answer just about all of your questions above but I'm not going to. ...........

 

For all those people out there who say volume/ VSA doesn't work in the forex market.......they are simply wrong. In my experience, the people who say this, do not know how to read VSA.......even tho many think they do (I mean no disrespect to anyone).

 

I fully agree with you Intel55. Though to me the time told to me for evolving in VSA did not seem appealing when starting out, I know today that one have to do some serious work to develop the "VSA-muscle" in the brain. It is another way of perceiving things and it takes time to get the brain to make those connections and ability to perceive the pictures given to you in the markets.

 

And yes, VSA absolutely works with FOREX. I use it too, but I would recommend to get a eSignal GTIS subscription to get the best and most trustworthy picture for us retailers. The latter my opinion off course.

 

Laurus